Published: Fri, May 18, 2018
Business | By Pearl Harrison

PayPal to buy financial technology firm iZettle for $2.2bn

PayPal to buy financial technology firm iZettle for $2.2bn

The decision from iZettle comes just over a month after Spotify became arguably Europe's largest startup to refuse to sell up to a US or Asian investor, listing on the New York Stock Exchange for about $27 billion. As per the last earnings call, the financial payment giant has a strong cash reserve of $7.8 billion, giving it enough financial muscle for acquiring promising companies.

Stockholm-based iZettle is best known for offering small businesses a mini credit card reader that can turn smartphones and tablets into payment registers.

Dan announced that it is the largest acquisition in PayPal's history and that it will significantly expand the company's "in-store presence around the world, strengthening our platform to help millions of small businesses around the world grow and thrive in an omnichannel retail environment".

iZettle is a mobile payments company that sells card-readers, primarily to small businesses.

In an open letter, Jacob de Geer, co-founder of iZettle, talks about the Paypal acquisition and what it means for the future of the company. Swift Financial provides small business owners with working capital and was acquired for an undisclosed amount.

IZettle expects to generate gross revenues of approximately $165 million Dollars in 2018, with approximately $6 billion USD of total payment volume (TPV) expected to be processed on its platform.

Upon closing, PayPal gains in-store capabilities in the following 11 markets: Brazil, Denmark, Finland, France, Germany, Italy, Mexico, Netherlands, Norway, Spain and Sweden. PayPal closed the Nasdaq trading day in NY with a market value of about $94 billion based on its share price, which rose a percent to $80 in after-hours trades. The deal will give PayPal a bigger footprint in hundreds of thousands of stores, and bring it in even more direct competition with Square.

The two parties have been negotiating a deal for years, but what may have convinced PayPal to seal the deal was iZettle IPO plans. But just how iZettle will be integrated with PayPal's own competing point-of-sale payment services remains to be seen.

The transaction is expected to be approximately $0.01 dilutive to PayPal's previously communicated full year 2018 non-GAAP EPS.

The company is still operating at a loss, according to IPO documentation.

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